The Memphis startup scene: EmergeMemphis, LaunchMemphis, LaunchPad, Seed Hatchery – how does it all fit together?

If you’ve kept up with local news, Facebook, and Twitter, you may have heard about the entrepreneurial culture that is growing in Memphis. You may have heard about organizations like EmergeMemphis, LaunchMemphis Launchpad, and SeedHatchery that support local startups. But how do they all fit together? I have to admit I was a little unclear on the concept myself. Tuesday night, local entrepreneur Eric Mathews took me on a tour of EmergeMemphis and explained it all.

EmergeMemphis is the small business incubator down on Tennessee Street. Businesses pay rent for office space, and gain access to value-added services, high-tech education, and mentoring programs. Graduates include RedRover Sales & Marketing, Destination King, and the Memphis & Shelby County Film & Television Commission; these are among the businesses that have leveraged the incubator’s resources to become successful and move out into spaces of their own.

Businesses do have to pay rent at Emerge, though, and I know the rent for a typical office space to be roughly what I pay a month for my Downtown apartment. That’s affordable compared to other office space Downtown, but it’s still significant. For businesses to be able to afford rent, Eric explained, they need to either have venture capital (which is hard to come by in Memphis) or they need to have a good revenue stream. How do startups build themselves from an idea to the point where they can pay rent?

That’s where LaunchMemphis LaunchPad comes in. It’s a coworking space that is one of the companies inside EmergeMemphis. There’s no rent; anyone with an idea can talk to LaunchMemphis about using the space. Companies that cowork there gain access to Emerge’s resources: They can reserve meeting rooms, make copies, access kitchen facilities, etc.

Although many of the well-known current startups in Memphis are tech startups, Eric told me that LaunchMemphis will work with anyone. I was surprised to learn that one of my favorite bars in the Downtown core went through a business plan bootcamp with them a couple of years ago.

If there’s no rent, what does the Launchpad ask of people who come in and use the space? “If and when you get through the process and succeed with your business, we ask that you give back,” Eric said. “Remember how I said venture capital is hard to come by in Memphis? We ask that if you’re successful, that you give back, become an angel investor and help the next generation of Memphis startups.”

In the meantime, Seed Hatchery is addressing the issue of venture capital. “People come in with an idea, and if their business plan is strong enough we’ll make an investment to help them get started,” Eric said. “But we’re serious. We want and expect to get our money back.” Seed Hatchery participants go through a rigorous program that includes mentoring and exercises designed to build successful entrepreneurs. “You basically won’t have a life for 90 days,” Eric said.

Furthermore, some of the exercises are designed to lead to failure, Eric told me, because an entrepreneur needs to experience failure. “The average entrepreneur fails 3.7 times before they start their first successful business.” I remember following one Seed Hatchery startup, Work for Pie, on Twitter. They linked to a blog post describing the intense startup program. They were told that everything they thought they were going to do was wrong, and yet it was refreshing and inspiring because the mentors were willing to give their time to show them how to do things the right way.

The Seed Hatchery program is also designed to be action-based, Eric said. Participating businesses don’t spend a lot of their time reading textbooks or attending presentations by experts in the field. Rather, they get out there and DO. They build their business and learn from their mistakes.

Eric and I discussed the cultural change that needs to happen in Memphis for the entrepreneurial climate to work here. “In Silicon Valley, if people go off and you don’t see them for several months, everyone’s like, oh I get it, they’re starting a business. Here it’s considered weird for people to do that. We need to change that way of thinking.” He also wants to get the entrepeneurial mindset in the schools, because startups are the great equalizer – whether you’re black, white, yellow, rich, poor, or whatever, anyone can make a startup succeed. They just have to be willing to put in a lot of very hard work, and not get frustrated by failure.

SeedHatchery is getting ready to select its 2012 class of startups, so if you have an idea for a business you can apply here.

The chain is not complete yet, Eric told me. The missing piece of the puzzle is venture capitalists that are willing to invest in the Memphis startup market. He told me he hopes to get a new group, Wolf River Angels, going in the coming year to address this and complete the path from idea to success.

Check out the LaunchMemphis website to see the calendar of events they have throughout the year to support entrepreneurial minds: 48 Hour Launch, Business Plan Bootcamp, BarCamp, Tech Cocktails, Ignite Memphis and a lot more. Thanks to Eric for a fantastic tour and an orientation to the Memphis startup scene. If you have an idea for a business, I hope you check out the links in this post, and take full advantage of the resources this city has to offer.